What’s ahead for the San Diego County real estate market in 2015?
San Diego County has emerged as one of the healthiest U.S. housing markets in the last couple of years. The upward trend in the market, combined with the presence of great deals, and of course magnificent weather, has drawn many Americans to this part of Southern California. Right now, San Diego ranks as one of the strongest real estate markets, but it isn’t without its quirks. So will these be ironed out in 2015? Where will the action be?
Rising Above Water
Although San Diego real estate has been on fire, the latest statistics show that county residents are still $6.1 billion in the hole, in negative equity that is. This represents about 10% of county homeowners, at around 47,000 housing units. The highest dollar amounts of collective negative equity can be found in downtown San Diego, Chula Vista, and Oceanside, according to local papers. If these trends and pace continue, this number should be at least cut in half within the next 12 months.
Foreclosures
CoreLogic reports that, although November 2014 had few working days, mortgage lenders still seized and took over 125 San Diego homes with delinquent mortgages in the month. While some anticipate this number to continue to fall in 2015, thanks to rising equity and easing in credit markets, there could be more motivation for lenders to speed up foreclosures as equity rises.
Some volume real estate investors may begin shifting more of their attention to finding other types of acquisitions and tapping San Diego, CA wholesalers for deals in order to keep up momentum.
San Diego Real Estate Price Gains
San Diego home prices have bounced back significantly, adding $140,000 to the median property value over the last few years. This may have been tempered by tighter lending in 2014, but experts expect income gains and in-migration to fuel more growth. UT San Diego reports the California population bleed has been drying up, and new immigration reforms could add a substantial amount of demand for housing and home purchases in 2015. The downtown San Diego core should still experience significant movement thanks to more inventory, as properties come out of negative equity. However, the best price gains are likely to be seen outwards as residents seek more affordable properties and demand more for their money. Government pushes to spur mortgage lending and home buying ought to enable more individuals to buy, especially if interest rates remain low in 2015. However, expect already high rents to keep rising for the time being, and adding to profits for SoCal income property investors.
Keep an eye out for shifts to affordable housing and action from first time home buyers.
HOAs
Home Owners Associations (HOAs), their budgets, and quirky rules continue to be one of the hottest topics in the media. This could come to a head, or at least reach some form of tipping point in 2015. However, it is still unclear whether some of their power will be stripped in 2015, or whether home buyers will revolt and cause them to rethink as they add pressure with their home buying choices.
2015 ‘Year of Stability’
In summary, while there will be significant movement, and no doubt seasonal spurts of activity, the overwhelming expectation for San Diego, CA real estate in 2015 is that it will be a year of stabilization. However, savvy real estate investors and home buyers could use this time when others underestimate future growth to sweep in and secure attractive deals ahead of the real period of growth to explode from 2016 and beyond.
